FLASH: German gold report reveals secret sales that likely were part of swaps

By cpowell

Created 2012-10-22 20:27

3:51p CT Monday, October 22, 2012

Dear Friend of GATA and Gold:

With the Associated Press report appended here, the German gold audit story has just exploded into the English-language press with some important revelations:

-- The gold vaulted by the German central bank, the Bundesbank, with the Bank of England "has fallen 'below 500 tons' due to recent sales and repatriations. ..." So despite the lack of official announcement, Germany lately has been selling gold from London -- perhaps as part of the secret "strategic activities" grudgingly acknowledged two years ago by the Bundesbank to GATA's friend, the German financial journalist Lars Schall:

http://www.gata.org/node/9363 [1]

The lack of announcement of the sale of the German gold in London suggests that the sale was actually part of a gold swap with another central bank -- like the New York Fed. That is, the powerful implication here is that German gold in London was sold at the behest of the United States and in exchange Germany took title to United States gold vaulted in the United States -- or title to gold supposedly vaulted in the United States. This way the Bundesbank could continue to claim ownership of the same amount of gold without lying, at least not technically.

As for the Federal Reserve and the U.S. Treasury Department, when you rig every market you can't worry so much about lying.

Of course such gold swaps were the target of GATA's federal freedom-of-information lawsuit against the Federal Reserve in U.S. District Court for the District of Columbia, a lawsuit concluded somewhat successfully last year, having pried from the Fed an admission that it has secret gold swap arrangements with foreign banks:

http://www.gata.org/node/9917 [2]

-- The Bundesbank is resisting accountability and has censored part of the auditors' report in the name of protecting secrets of the central banks storing the German gold. But why should there be any secrets about it? Nobody's asking for the combination numbers to the vaults, and the combination wouldn't do anyone any good anyway, as the vaults are guarded. Do these secrets involve gold loans and leases and other legerdemain? That seems to be the case.

-- The campaign to repatriate the German gold has gotten noticed in a big way.

-- The Bundesbank has been officially reprimanded by another German government agency for negligence in its custodianship of the national gold.

-- The Bundesbank won't let German parliament members inspect the German gold vaulted abroad because the central bank vaulting facilities supposedly lack "visiting rooms." And yet one of those vaults, the Federal Reserve Bank of New York, offers the public tours that include "an exclusive visit to the gold vault" -- provided, apparently, that you're not an elected representative of the German people:

http://www.newyorkfed.org/aboutthefed/visiting.html#tabs-1 [3]

GATA has made further informational requests of the Federal Reserve, Treasury Department, and State Department involving their gold records:

http://www.gata.org/node/11606 [4]

Since those agencies have failed to respond, GATA now is entitled to bring more freedom-of-information lawsuits against them. But we can't do that without sufficient financing.

The auditors' report about the German gold demonstrates that the Western central bank gold price suppression scheme -- part of a vast scheme of rigging all major markets -- can be exposed and defeated by persistent clamor and demands for information. If you haven't already considered helping us financially, please do so now:

BERLIN -- Germany's central bank has failed to properly oversee the country's massive gold reserves, which have been stored abroad since the Cold War in case of a Soviet invasion, independent auditors say.

The central bank must renegotiate its contracts to gain the right to inspect its gold bars, which are worth tens of billions of dollars and are stored in the United States, Britain, and France, the Federal Auditors Office said in a report to lawmakers obtained by The Associated Press on Monday.

The report says the gold bars "have never been physically checked by the Bundesbank itself or other independent auditors regarding their authenticity or weight." Instead, the Bundesbank relies on a "written confirmations by the storage sites."

... Dispatch continues below ...

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Most of Germany's gold reserves -- some 3,400 tons worth an estimated $190 billion at current rates -- have been kept in the vaults of the U.S. Federal Reserve, the Bank of France, and the Bank of England since the postwar days, when Berlin worried about a possible land war with the Soviet bloc.

The auditors maintain that the central bank must be able to at least inspect samples of its gold bars at regular intervals to verify their book value.

The report acknowledges that such inspections might be logistically complicated, but it stresses that "this cannot discharge [the bank] from the necessity to carry out an inventory."

The central bank said in a reaction to the report that was also sent to lawmakers Monday that it sees no reason for a physical inspection of the bars. "There is no doubt about the integrity of the foreign storage sites in this regard," it stated.

The debate on most of the gold reserves being held by foreign authorities has caused some inevitable conspiracy theories questioning their very existence, but several German politicians have also voiced unease.

Philipp Missfelder, a leading lawmaker from Chancellor Angela Merkel's center-right party, has asked the Bundesbank for the right to view the gold bars in Paris and London, but the central bank has denied the request, citing the lack of visitor rooms in those facilities, German daily Bild reported.

Given the growing political unease about the issue and the pressure from auditors, the central bank decided last month to repatriate some 50 tons of gold in each of the three coming years from New York to its headquarters in Frankfurt for "thorough examinations" regarding weight and quality, the report revealed.

An initiative backed by some German economists, industry leaders, and a few lawmakers dubbed "bring home our gold" launched in May has attracted some 10,000 supporters online so far.

But Finance Minister Wolfgang Schaeuble and others maintain that there is no reason to worry.

"I currently have no doubt about the stock and the storage of the gold reserves," said Priska Hinz, the opposition Greens top lawmaker on the budget committee. "I do not doubt the reliability of the foreign central banks," she told the AP.

Several passages of the auditors' report were blacked out in the copy shared with lawmakers, citing the Bundesbank's concerns that they could compromise secrets involving the central banks storing the gold.

The report said that the gold pile in London has fallen "below 500 tons" due to recent sales and repatriations, but it did not specify how much gold was held in the U.S. and in France. German media have widely reported that some 1,500 tons -- almost half of the total reserves -- are stored in New York.
* * *

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http://gata.org/node/wallstreetjournal [15]

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